down. good evening, everyone. i'm larry kudlow. this is "the kudlow report." a terrorist rocket lands in tel aviv. israeli troops massing at the gaza border, thousands of reservists called to duty. this is war. question, is this war going to spread? next question, why shouldn't israel just wipe hamas out for good? we are learning that president obama wants more tax hikes than any would imagine. it's the second story. that moves us close to stalemate and recession. that's right. still not much talk about spending cuts. so tonight we have budget cutting hawk jeff flake, the senator-elect from arizona. then there's this -- >> watch out. they're stealing the hostess twinkies. >> watch this.

here's your reward. >> thanks! >> the question is, will the union succeed in stealing the twinkies forever? the ceo of hostess speaks out and speaks to us about this subject. first up, breaking news out of the middle east. at this hour, israel giving the green light to call up 30,000 reserve troops and is moving forces toward the gaza strip. this is war. this after tel aviv came under rocket fire attack for the first time in 20 years today. and where is president obama on all of this? let's get right to our special guest this evening. we have former assistant secretary of state rich williamson and syndicated radio talk show host john boutzer. how much injury they inflict on hamas?

i want to know if the total blowout is possible? >> yes, it is, larry. why that is critical is because egypt is involved profoundly in this problem. morici, the new le elely electe president of egypt, is in the muslim brothers. the muslim brothers and hamas are directly related. this is about egypt and the 1979 peace treaty. >> right. i'm going to get back to the whole issue of the spreading war. but i'm just real interested in the assessment, ambassador williamson, welcome back, that israel can just inflict massive, permanent damage on hamas and their alleged military. >> well, larry, first of all, i think it's really important to take a step back. we've been involved in a presidential election that sucked up the oxygen. hamas is a group that's recognized as a terrorist organization by the u.s. government, the israeli government and the european

union, has increased shelling in areas of israel over recent weeks. they now have shelled tel aviv and 180 missiles went into southern israel. so israel for its own self-defense, its right of self-defense is organizing, rallying more reserve troops, getting ready for more permanent action. it can and should do what's necessary to protect its citizens, which means inflicting damage on hamas. >> heavy damage, deep damage. go as long as it takes. but john, given what you and ambassador williamson just said, where is the white house on this? the best we can find is not a public statement. the best we can find came out of a white house statement. i'll quote, israel has the right to self-defense in light of the rocket attacks. but that's not the president really standing up for israel. this was some white house spokesman echoed by the state department, john. that ain't the kind of support

that i'm looking for. >> my information, very fresh, larry, is that the president has been on the phone with mohamed morici in cairo brokering a cease-fire between hamas and israel as a predicate for his visit to the white house later on this season. i also want to mention that this is not a one-dimensional problem for israel. hezbollah in the north i'm being told is being consulted by hamas to launch its rockets to the north of israel. in addition, jordan is aflame with muslim brother provocati s provocations. and there's a dark hand here. the rockets were fired into tel aviv today not just by the islamic jihad but by the control agents of the islamic jihad, iran. iran is part of this matrix, larry. >> i totally believably. rich, in light of what john just said, this thing could spread throughout the whole region. we've got now syria, lebanon, hezbollah. of course, hamas, which i think israel is going to wipe away.

what about egypt? what about turkey? and what about iran? in other words, how big is this going to be? how much is this going to spread? this may become a massive world event. may become, for all i know, a financial market event. but i want to ask both of you gentlemen with the remaining moments we have, how far is this going to spread? >> first, larry, you already raised one of the problems. and that is there's been indecision and uncertainty in washington on our middle east policy, whether it's being tougher on benjamin netanyahu for defending israel than they've been on iran for not having nuclear weapons. whether it is the conflicting approaches to the middle east peace process, et cetera. so there's a vacuum that has to be filled. the u.s. has to step up and provide leadership. president morsi in cairo called mr. jabari, the terrorist who was killed, a martyr.

the muslim brotherhood does have a close relationship with hamas. iran has given hundreds of millions of dollars to hamas in recent months. so the region is in turmoil. the u.s. should step up firm for our ally, make clear where we are, try to get turkey and egypt -- both of whom have been sympathetic to hamas -- to stand down. >> that's not happening. john, u.s. foreign policy in the middle east, maybe elsewhere, but in the middle east right now in the wake of libya and benghazi, we are at low ebb, john, in the eyes i dare say of middle eastern countries and in the eyes of european countries and maybe in the eyes of asian countries. our cia director is gone. there's some kind of sex scandal going on. they all testified today on benghazi. no one knows what came out of that. my point is this, if president obama is asking the president of egypt who has sympathies with

all these terrorists and guerrillas, where's the clear statement that the united states government supports the right of israel to defend itself, just flat-out from the president himself? >> the president of the united states, beginning of arab spring, chose the wrong side, larry. he chose the arab strongmen. they now believe the president can be treated as a chump and they can attack israel without risking themselves. that's what's going on right now. i mention this. there is a good report that that missile that landed in tel aviv was not fired from the gaza strip. it was fired from the northern sinai near rafik, fired from egyptian territory. morsi knows this, larry. this is trouble. >> that's the thing, john. egypt is not a good player. they're supposed to be an israeli ally. they are not. i don't even know if they're an american ally.

i don't know whose israel's ally is in the middle east. i'm just waiting for the united states to become an israeli ally because iran which is funding this and funding the hamas weapons, iran is watching closely. this is one of these symbolic things, john batchelor. if we don't do it right, we're going to look terrible. >> larry, israel does have a very good friend in the united states and it's excellent. it's the united states congress, 1,000%. >> good stuff. many things to rich williamson and john batchelor. another big breaking story tonight, 5:00 p.m. came and went with no sign of an end to the union strike at hostess brands. will the company now begin to lick q li liquedate and lay off employees? i spoke with the ceo. >> we asked for an 8% year one

wage cut but we asked for it across the board, management, nonunion, everyone in the company has taken an 8% cut. that comes back up starting in year two. and i works out over the five-year contract to be a 4% cut in wages across the board, all employees. we cut back -- we tried to move the union employees closer to what we pay nonunion for health and welfare. and we certainly cut back on our pension contributions to the multi-employer pension plans. there have been no demands from the bakers. they decided they didn't like the deal. i can't imagine a scenario where they would get a better deal than the other 13,000 employees that we have. that makes no sense. i think there are some who think they've been misled. i think some think we're going to come back to the bargaining table. that's misleading. there's nothing else to bargain over. and there's an element that would like to see the company go under because they're angry. i don't know that i'm going to reach them anyway.

>> let me just ask you how this plays out. if the requisite number of bakers, union people, do not return to work this evening, what happens next? >> we'll file a motion to wind down the business with our bankruptcy judge, judge drain, here in new york. and he will probably hear that on monday afternoon. and he will probably grant that motion to wind down because, frankly, there will be no other option for the business. >> and so roughly 5,500 bakers lose their job or is it the whole 18,000? >> all 18,500. >> and they know this, do they not? they'd rather have no job, taking the same concessions that the teamsters took rather than a job? they know this? >> i would think that they would have to know it. whether they believe it or not, i don't know. i question whether union leadership actually cares about these jobs because, frankly, it doesn't seem to me that they do. i think they're more concerned

about having a precedent set so that other competitors can come to them and ask for similar concessions. i don't see that happening because other competitors aren't in bankruptcy. but i don't see where this works in any possible way for our employees. >> so the great old company, hostess brands, could be ending tonight, it could be over tonight? >> that's correct. >> and it's just playing out the hand at that point, right? an orderly liquidation? how long will it take? >> six months or so. some of the record-keeping takes a little longer. but most everybody will be sent home almost immediately after the hearing on monday or -- i'm sorry, after we have to file the motion tomorrow. and then the hearing on monday would simply finalize it from a bankruptcy court standpoint. and, look, i've heard people -- i've heard bakers and other employees say, hey, greg is just

threatening us. i've said consistently. this isn't a threat. this is a consequence. the bakers are on strike and this is going to be a consequence unless they come back to work. >> there you have it. it's such a tragedy. you've got private sector unions, the bakers union, misbehaving and throwing a grand old company completely out with 18,000 some odd workers unemployed. they'd rather be unemployed than accept the reality of some wage and benefit reductions. and, by the way, folks, in case you missed that, the teamsters accepted the wage reductions and stayed on the job. it's the bakers union that is bringing down this great old company. let us move on. stocks fall further, i think, on fiscal cliff woes. question here is, are market vigilantes trying to force a fiscal deal? t.j. rogers, the great ceo of

cyprus semiconductor will talk to us. and a romney voter writes to obama asking for bipartisan progress and is shocked when the president reads his lel at yesterday's press conference. that letter writer is going to join us here live. don't forget, folks, as always, free market capitalism, it's the best way to prosperity. i'm kudlow. "the kudlow report" is coming right back. [ female announcer ] want to spend less and retire with more?

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the stock market selloff continues with the dow, nasdaq and s&p all down more than 5% since president obama's reelection with a looming fear of a stalemated fiscal cliff that might lead to recession, now inexplicably president obama appears to be calling for a humongous $1.6 trillion tax hike. i don't get it. no one, by the way, is talking about spending cuts. let's go to our friend. the j. rogers, the great ceo of cyprus semiconductor. thank you for your time. it's like a circus, like a spectacle in washington. the government is too big, spends too much. and the president called for a $1.5 trillion tax hike over the next two year. stock market is getting pummeled. what do you make of all this? >> well, i'm 64.

so i've seen the circus show before. there was a quote i liked during the carter administration which is, where else would you send a clown but to a circus? the clowns are acting like clowns and they're doing destructive things. i hope we don't have a lock-up. i remember the last time that happened, it was a republican side thing where newt gingrich engineered a shutdown of the government. i personally thought it was kind of interesting because my life was unchanged when millions of non-essential government employees got laid off and it didn't change my life a bit except for it was easier to drive on the freeways. but newt got punished for it. and the party got punished for it. so americans don't like this. and i think they need to find a way to work it out. raising taxes is not it. if the deal is that the average citizen is not well off right now and too many average citizens are unemployed, obama's reelection, he had the highest

unemployment rate ever of any president that's ever been reelected, and if his job really is to lower unemployment and raise the economy, if that's really what he wants, i don't think it is. i think he's a doctrine, big government, socialistic guy. but if he wants to help the economy, it's to cut government spending. balancing the budget doesn't matter if the budget is real high. >> he's taken -- he proposes to take money out of the private sector. $1.6 trillion, which kind of came out yesterday or the day before, blew everybody's mind. but how do you see this? stock market falling after the reelection. i know there are many factors in the stock market. but my question is this, t.j. from your vantage point out there and from your vantage point philosophically, what do you think the president wants to do? what do you think people reelected him to do? >> well, i'm not sure they

reelected him to do anything. there's been a lot of blather about the obama mandate. the fact is it was an obama squeaker and if the republicans had put up a better candidate as ronald reagan got put up against jimmy carter, president obama would be unemployed right now. what do i think he wants to do? i think he wants to pursue his ideology. i don't think it's about economy. he told us what his ideology is. he told us, you didn't do that. i'm in the middle of silicon valley. we did that. we invented things. we changed the world. the way you and i are talking to each other coast to coast, we did that. it wasn't the government because they put in sidewalks and put stripes on the roads. but he believes that people -- that entrepreneurs and businesses don't do stuff. he believes the large, collective central organization, the government, is what does stuff. >> how do we get the free market back, t.j.? how do we get this whole great

american economic country of ours back on the free market path? that's what i need to know. >> let me give you the bad answer. i think it's probably an accurate answer. we've had 12 years of economic mismanagement. this is not an obama/democrat problem. this is a bush/republican/obama/democrat problem. 12 years of bad economic management. i believe we're going to have to suffer in hell for another four years. and at that point in time, we may be angry enough to make a change. >> how much suffering? >> the employment rate stays where it is and stay there is forever unless something goes wrong. unless there's another tremor of economic -- some country going under, something that kind of shakes things up. we just basically bounce along the bottom for another four years in the best case. it could get worse than that. >> how does this affect your business? how does this affect silicon valley? >> an established business like mine, we'll simply hunker down, won't hire as much.

won't do as many r & d projects. we'll survive. we've got money in the back. who will get hurt are the start-ups that will never come to exist. right now, my money, i'm a top 1% guy. i'm proud of that. my money's invested in start-ups here in silicon valley through various venture funds and through direct investment and through my board positions, i'm nurturing new start-ups to follow on after my company in silicon valley. the companies here that are going to get hurt are the company that is won't be able to get money because the money's going to get spent in washington. >> we're going to have to leave it there. never give up hope that somehow people will come back to their free market senses and grow this thing -- >> the one hope -- >> sorry. we're out of time. thank you so much. folks, government spending is still going wild. washington is supposed to be making spending cuts. a new report reveals huge government waste.

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get ready for your blood to boil. at a time when washington is supposed to be cutting costs to avoid the fiscal cliff, a new report outdoor today revealed that gazillions of dollars are being wasted. eamon jarvis joins us.

>> reporter: the senator who put the report together is republican tom coburn of oklahoma. he says the department of defense has become the department of everything these days. take a look at some of the spending that he found buried inside the pentagon's budget. coburn said he found spending by the pentagon and other departments of funding studies of babies interacting with robots, the air force spending money on studying the color of dinosaur feathers and darpa spends $6 million on a study of storytelling techniques and the brain. coburn said he or she identified about $67.9 billion worth of spending that he thinks over ten years can be easily cut out of the pentagon budget. and i want to leave you with one of the other items that he found here. this was kind of a whopper to a lot of us here in the office. he found that the pentagon had financed a seminar discussion and the topic of that discussion was, did jesus die for the

cling-ones, too? and it was a discussion of whether or not -- what the implications are for christianity if extraterrestrial life is discovered? those are your taxpayer dollars at work. >> eamon jarvis, thank you very much. sure, obama care may guarantee you health insurance. but what good is it if you can't get any health care? a new study warns that obama care will drive doctor pay so low we're going to face a doctor shortage very soon and one of those real private practice doctors who faces the crunch is going to join us in the next half hour. many thanks now. question, what's the average salary where you work? 40,000 bucks, 50,000 bucks, 60,000 bucks? at lipa, the long island power authority, a public institution, it's $102,000. that's right. and more than half of the employees there make six figures. this power agency still doesn't have all the lights on in hard-hit shore communities.

almost 2 1/2 weeks after superstorm sandy. lipa acts as a general manager that farms out the actual power operations to the national grid. more than 21,000 lipa customers are still without power. and they are making awfully good money. president obama read a letter at his press conference yesterday from a romney voter in tennessee who urged him to make a fiscal cliff deal. that man is about to join us live. plus, as we stand at the precipice of the cliff, is compromise possible? we'll ask congress jeff flake. all that up next on "kudlow."

welcome back to "the kudlow report." i'm larry kudlow. in this half hour, benghazi-gate rears its ugly head again today. two months after the deadly terrorist attack on our u.s. consulate in libya, lawmakers are finally briefed by intelligence, state and fbi officials. call it president obama's bad medicine. my 2025 research shows the u.s. will have a full-blown doctor

shortage because of obama care. first up, with 46 days until the country's economy plummets off the tax and fiscal cliff, new signs tonight that democrats are digging in when it comes to raising taxes on the rich. take a listen to a letter president obama read in his first second-term press conference yesterday. >> it came from a man in tennessee who began by writing that he didn't vote for me. which is okay. but what he said was, even though he didn't give me his vote, he's giving me his support to move this country forward. and he said the same to his republican representatives in washington. he said that he'll back each of us, regardless of party, as long as we work together to make life better for all of us. and he made it clear that if we don't make enough progress, he'll be back in touch. >> so here now from nashville is steve wise. he's the author of that letter

and he's the president and ceo of identified, inc. steve, welcome. congratulations. i want to ask you briefly. in the first term, president obama on the stimulus package and on obama care, there was no compromise. there was no reaching across the aisle. do you believe, sir, that in the second term president obama will change and will find common ground with republicans? >> well, larry, i'm an optimist. i believe that you need to give people a chance, you need to tell them you support them and then you need to hold them accountable. that's why i felt that i needed to send that message off to the president and to my representatives, really telling them that time is now. we can't wait any longer. we've got to do something. i'll support you, but i'll also hold you accountable and watch that it's happening. >> i want to have the same positive view you do, second term, clean slate, et cetera, et cetera. so when he read your letter with your very clear message about

compromise and common ground between the two parties, do you think, steve, that he was sending a message -- sometimes presidents speak metaphorically, sometimes they speak symbol symbolically. do you think he was sending that message to the country? >> well, i believe the letter was read for a reason. and that was to show, here's a guy who is starting up a company, is in the upper middle class, most likely will be affected by whatever happens, did not vote for me but is still willing to support me in getting things done. for that reason, i think he was trying to send a message that we should align behind that. but also i'm hoping he's accepting responsibility for getting it done as i'm hoping the representatives will. >> if he calls you up o, wand s what's the most important priority that i should undertake, what would you tell him, most important priority?

>> well, from my perspective, it's the economy. it's getting people back to work. it's encouraging small business. it's getting us to a better place and helping us at least feel comfortable that the kids we've got are going to be better off when the time comes. >> does it bother you that he's talking about these big tax increases, $1.5 trillion? he's been reelected president a week and he's already talking about big tax hikes. does that bother you? >> well, larry, i'm not an economist. i don't know all the details behind all of that stuff. what i do know is that change doesn't come easy. it's going to affect everyone in some way. but, you know what, in the end, we've got to do the right thing, show people that we're making progress. and i think everyone will buy into that. >> amen. well put. congratulations on the letter. thank you for writing the letter. it's a great service. many thanks to steve wise. can lawmakers find common ground? let's bring in our special guest tonight. joining us exclusively,

arizona's president senator-elect, congressman jeff flake. jeff, i'm going to call you senator flake right now, it fits very well. a couple of things i want to cover with you, sir. one of them is congratulations on your victory. >> thank you. >> but i am troubled -- i don't know that it's conclusive, but it's come out in the last 24, 48 hours that the president wants about a $1.5 trillion tax hike over the next ten years. i don't hear spending cuts. i don't hear compromise with the republicans. he wants to raise tax rates. he's probably going to have caps on deductions. how do you read this story? you heard steve wise who wrote that lovely letter about compromise. do you read this as compromise? >> i like steve wise. did not vote for the president, but i'm willing to meet the president somewhere in the middle. i think republicans have already said, we'll put additional revenue on the table. we don't need to raise tax rates. what we haven't heard from the president is some commitment to address these drivers of our debt. and that's the entitlement

programs. until we have some kind of firm commitment there, it's difficult to compromise. >> you're known as a budget hawk, okay, great. why doesn't the president, like he's at this news conference yesterday, why doesn't he tell me instead of $1.5 trillion in tax hikes, why didn't he walk through $1.5 trillion in spending cuts, new spending cut, not warmed-over stuff that's been scored because we're getting out of afghanistan and iraq. brand new, new ball game, okay? and if you give me some revenues, i'll give you some deep spending cuts. where is that, jeff flake? where are the spending cuts? >> we haven't heard it yet. perhaps it's the come. we hope so. but we haven't heard it yet. in fact, during the campaign, the democrats liked to say, the republicans wouldn't even accept a 3-to-1 spending cuts versus revenue increases or 5 to 1 or 10 to 1. we haven't heard 1 to 1.

let alone 3 to 1. we haven't heard any real meaningful spending cuts. they'll mention things that have already taken place like getting out of afghanistan. or with regard to medicare, they'll talk about squeezing the docs a little further, cut wes know aren't sustainable. but they won't go in and do the actual cuts that can be maintained and are necessary to put these programs on sure footing for the long run. we haven't heard that at all. >> i take the old milton friedman view. spending as a share of gdp is the real tax burden on the economy. so i want to get spending as a share of the economy as low as possible. i'm not hearing that. i'm, in fact, hearing, senators on both sides of the aisle, democrats and republicans, and you know who they are, who are saying, let's not do the across-the-board automatic cuts, let's not do the sequestration.

there are senators saying, we're going to throw sequestration out. obama said it during the debates and i think he implied that at the press -- we're going to throw those $1.2 trillion spending cuts out. what is that all about? how does that serve the taxpayers? >> ki tell you, we need to do what we did in the house. if we're not going to cut defense -- i do believe sequestration takes defense cuts too far. but if we're not going to do that, we better darn well hit those spending targets and then some by cutting spending elsewhere. and that's why in the house, we proposed taking those cuts and doing them elsewhere. we have to do that. these spending targets that the sequestration actually hit are pretty minimal. this is about $1.2 trillion over ten years. that's about our annual deficit. and so we've got to do at least that and then some. so if we're not going to take it from defense and i think that this is overboard on defense, we've got to take it from somewhere. >> you're going to devote yourself to that is what i'm going to guess -- >> you bet.

>> you're in a group of senators, i read, that's going to work on immigration, try to give the republican party a new message, lord knows it needs it. i want to ask you this -- we've got this illegal immigrant, undocumented -- whatever it is, 10 million, 11 million, 12 million. and i tend to be very liberal on this question. how can we get them from being illegals to legals? that's the question i'm asking. they're here. we're not going to deport them. i'm not just saying this for politics. i believe in the opportunity message. i believe in the growth message. i liked reagan, loved reagan who wanted to welcome immigrants into the united states. jeff flake, can we get them from the illegal status to the legal status and start fixing this problem once and for all? >> yes, we can. some of us have been working on this for years. i have for more than a decade. i've introduced the strive act that does exactly that and other forms of broad-based immigration reform. obviously in arizona, we have to get border security.

that has to be a priority. but once we do that, we have to deal with those who are here illegally now in a rational, humane way. and that means getting rid of this notion that we're going to deport 12 million people. we're not. we need to find a way to move ahead rationally and humanely. >> it's not just deportation. it's also the brainiacs. they should stay here and give them -- >> you bet. >> if i take the asians who boycotted the republican party also, if the asians go to our best colleges, why are we booting them out? for that matter, if any foreigners go to our best colleges and they're smart enough to get through, i want these m.i.t. graduates to stay here and maybe invent now manufacturing companies? >> we ought to roll out the red carpet for those with the ph.d.s willing to stay. that's why i introduced the staple act. i staples a green card to their

diplomat, basically says, if you have those skills and you want to stay, you can stay. none of the quotas we have on immigrants coming in apply to those who have these degrees in that field. >> seems to me, lower tax rates, sure, i'm a supply cider. but lower spending and safe, stable immigration, these are all pro-growth, senator flake. these are all pro-growth and should be packaged as a package, it seems to me. put them all together. better immigration reforms, lower spending and real pro-growth tax reform. >> not only that, i think it's a message that appeals to a broader base than we have now. we've got to make sure that moving ahead, that we have a message that sells not just in certain demographics but in all demographics. and that's a message that does. >> i think it's a free market economic freedom message. i really do. free market is the best path to prosperity. i think it's a freedom message. good luck.

god bless. senator jeff flake. we appreciate it very much. coming up on "kudlow," the red ink at the post office is becoming an ocean. a $50.9 billion annual loss for fiscal 2012. what else is new? the postmaster general calls it, quote, our own postal fiscal cliff, end quote. he all but begged congress to pass the postal overhaul bill that would allow it to eliminate saturday mail delivery and reduce benefit costs. the postal service would now be profitable with congress had acted earlier in the year. pardon my skepticism on that. and today's benghazi hearings turned ugly. republicans accused obama of lying. democrats fire back. it all began with republican congressman dana rohrabacher -- >> we have four of our diplomatic personnel dead and it is not a mccarthy era tactic to demand accountability and demand that the american people are not

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bp pleads guilty and they're going to pay a record $4.5 billion fine to settle criminal charges related to the deaths of

the 11 workers when the deepwater horizon blew up more than two years ago. three bp officials were charged, two of them with manslaughter. the agreement does not cover civil penalties. it doesn't cover payouts to businesses and individuals. now, two months after the deadly terrorist attack that killed our ambassador and three other americans in libya, the house committee on foreign affairs held an open hearing on capitol hill today. nbc steve handelsman joins us now with all the details. good evening, steve. >> reporter: good evening to you. a lot of yelling in that open hearing. but there were also closed hearings up here on capitol hill today. the cia, classified briefings. and after them, house democrats came out to report the agency threw a lifeline, if you will, to embattled obama u.n. ambassador susan rice, corroborating ambassador rice's account of what she knew and when she knew it, even though we

know now that what she was told and what she repeated was wrong about benghazi. libya remains highly political, partisan and even personal. libya's become a battle between president obama and republican senator ginnie mae who insisted again today the administration knew quickly that al qaeda had attacked. >> and for the president of the united states for two weeks afterwards to deny that that was the case is either a cover-up or it is incompetence. >> reporter: obama u.n. ambassador susan rice denied it, infuriating republicans. mike morrell on the hill today briefed some lawmakers on libya. one, a democrat said the account backed rice, that u.s. intelligence did give her the incorrect account that she passed on. >> this was a spontaneous protest that evolved into something militant, that was the best information they said they had at the time. >> reporter: there had been earlier attacks in benghazi, a warning from ambassador chris

stevens the day he died. house republicans hammered the administration reaction. >> the people back at state here in washington continued to deny additional security. and they continued to do away with security that was already there. >> reporter: democrats pushed back -- >> to lay this at the doorstep of the president or the secretary of state or the united nations ambassador, you will find us ready and willing to resist to the teeth. >> reporter: a fight over a tragedy that could be calmed by david petraeus, who as cia director went to benghazi to investigate and will testify to congress tomorrow. retired four star general petraeus may have quit in disgrace after he admitted to adultery. but his believability on national security and his reputation, larry, for bipartisanship leads a lot of people up here to believe that both sides will buy whatever petraeus tells them tomorrow

about libya. back to you. >> many thanks, nbc's steve handelsman. we appreciate the update. a new study shows that obama care will drive doctors' pay so low that we're not going to have any primary care physicians left in the country. we have a real private practice doctor who's going to lay this whole problem out for us next up. americans are always ready to work hard for a better future.

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♪ that i would rather, rather ♪ rather, rather be ♪ [ male announcer ] dip into sabra hummus and discover a little taste of the world. enjoy sabra dips. adventure awaits. welcome to the world leader in derivatives. welcome to superderivatives. the latest study out is just another taste of president obama's bad medicine.

according to researchers, by year 2025, the u.s. is going to have full-blown doctor shortage and it's resulting from the passage of obama care. here is dr. eric snipper, owner and partner at nred medical associates. dr. snipper, i read in this report, we're going to need 52,000 doctors, family doctors, primary care doctors. and they are not going to be around. why not? >> well, you've got a couple of problems. the whole situation is multifactorial. 38 million are going to be insured for the first time. the really issue is you're going to have medicare reimbursement rates going down to a level by 2018, 2019 that will be below that of medicaid. >> from the government? >> from the government. >> reimbursement, completely hurting the providers of the health care services? >> it's on the backs of the providers and the hospitals. this is the $716 billion

carveout that we heard about. >> you believe that's a real number? >> yeah, absolutely. >> i've had some very distinguished people on this show who say, they're just taking that money from the providers. but if you take money from the providers, aren't you taking money from the patients or at least taking time and quality from the patients? >> well, the problem is, we don't have as providers the ability to set our costs. we can't raise our rates because our rates are set either by insurance companies or by the government. so all we can do is go to economies of scale, try to lessen our overhead, which is a very difficult thing to do, or increase our volume. and you would have to believe since this has been going on since the deficit reduction act of 2007 that we have pretty much maxed out all of our efficiencies at this point. there's nowhere left to bleed. >> you're not going to get the old family dollar. old family doctor. you're not going to get it. what's the future look like? >> all specialties, if their medicare rates are reduced to below medicaid are going to have a tough time continuing to

accept medicare. >> medicare rates below medicaid, i'm going to assume that that is pretty low, that medicaid is like at the bottom of it. so they're bringing down medicare and so now it's this one size fits all that doesn't fit what the doctors are providing, is that fair? >> if you look at the current state of medicaid, patients have a tough time finding doctors that accept medicaid because the reimbursements are so low. this is one of the reasons why our emergency rooms are flooded with patients. because they can't find a doctor. and if we get to that point with medicare, with 38 million new patients invested into the new health care economy and with the aging of the population of america -- >> breaks the bank. >> i think it's a completely untenable scenario. >> what about other stuff? a lot of my friends are doctors and they talk about the things you're talking about. but they also say, i've got to pay a lot of money for lawsuit protection. >> that's right. >> which could bankrupt me and my partners in our practice. that's an old saw but nothing ever gets done. >> if anyone thinks that the

increase in malpractice premiums has abated because of the overall decline in income for physicians, they are sadly mistaken. the lawsuit tenor of this country is not abating at all. we are seeing situation where is you're looking at $200,000 before you even make a dime if you're a neurosurgeon or obstetrici obstetrician. and you see phoenix in heavily litigious areas not dliring babies or doing neurosurgery. that was not addressed in obama care. >> i don't know the way out of this mess. i want to ask you about a hot thing i hear about, these little clinics. they're run by nurses or practitioners of some kind. you see them in walmart, see them in a lot of retail stores. can the clinics help people? is that a medically sound safe way to go? >> it could be a way to deal with the increased volume.

but you have to look at it and say, if i have what medical professionals call a doc in the box scenario in a walmart, am i going to get the same kind of care that i'm used to getting for the last 15, 20, 30 years where i spend half an hour, 45 minutes with my gp and i doesn't make sense that would be the case. there are certain situations where pediatrics, it's a good idea and it certainly helps to have people go there as opposed to the e.r. for things that are non-emerge non-emergent. >> we're just going to have long waiting lines. people want to see a qualified primary care physician. it's going to be harder and harder to see them. you think they're going to be extinct or fewer and fewer? >> we already see it in massachusetts. massachusetts has the second highest ratio of primary care physicians to overall physicians and yet with the romney care, those guys are getting hit right now also with long waits. in canada, you have 9 1/2 weeks of a wait for a specialist. that's been going on for decades. >> did you say romney care? >> i did. >> i think i heard that. doctor, thank you very much.

honest and sobering. that's it for tonight's show. thanks for watching. i guess say this, a little free market capitalism in the medical profession, pay on time, exchange services properly, that might help the story. a little lawsuit reform, too. i'm kudlow. well, if it isn't mr. margin. mr. margin? don't be modest, bob. you found a better way to pack a bowling ball. that was ups. and who called ups? you did, bob. i just asked a question. it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob. i know.

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